Intermediate: Multi-product profit- volume graph JK Limited has prepared a budget for the next twelve months when it intends to make and sell four products, details of which are shown below:

Budgeted fixed costs are £240 000 per annum and total assets employed are £570000.
You are required

(a) to calculate the total contribution earned by each product and their combined total contri¬ butions; (2 marks)

(b) to plot the data of your answer to

(a) above in the form of a contribution to sales graph (sometimes referred to as a profit-volume graph) on the graph paper provided;
(6 marks)

(c) to explain your graph to management, to comment on the results shown and to state the break-even point; (4 marks)

(d) to describe briefly three ways in which the overall contribution to sales ratio could be improved.LO1

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Sales in units Selling Variable price cost Product (thousands) per unit per unit () () J 10 20 14.00 K 10 40 8.00 L 50 4 4.20 M 20 10 7.00